Real Estate Update: Interest Rates Nudge Up, Supply LowArea realtors assess market in early stages of 2017
By Lou Sorendo
Expect increasing interest rates, less homes on the market and slow and steady growth in home prices in 2017 in Oswego County, according to two real estate experts.
Birgit Kleinschmidt, broker/owner of 1st Carriage House Realty, Inc., Pulaski, characterized the real estate market in the Greater Pulaski area during the first quarter of 2017 as “extremely strong.”
“With the recent snowmelt and spring-like temperatures, our agents are busy finding buyers the perfect home.
She said this up-tempo trend is a carryover from 2016, which featured intensive listing during the first half followed by a busy selling period over the last two quarters of the year.
The median sales price of a home in February was $80,000, a drop of 5 percent compared to a year-ago figure of $84,250. In 2016, the median sale price of a home in Oswego County was $100,594.
Florence Farley, a real estate agent with Berkshire Hathaway CNY in Oswego, said to expect slow and steady growth at a slightly slower rate in regards to home prices.
Kleinschmidt said there has been a slight decrease in pricing of sold properties, which also slightly decreases the current listing price range and value. However, pricing and value depend on many other factors as well, she noted.
“The Greater Pulaski market has been very stable overall throughout the last five years and has not experienced too much growth or slow down at all,” she said.
Meanwhile, the Federal Reserve raised interest rates last December for only the second time since 2006.
“They were just raised again recently, but all of this has been expected,” Farley said. “They are going up in small increments and that is actually healthy for the economy. The rates have been so artificially low and subsidized by the government that when the economy starts to improve, the Fed chair and board will raise the rate to avoid inflationary trends.”
The Fed’s monetary policy committee raised interest rates by a quarter of a percentage point at its March 15 meeting.
Chairwoman Janet Yellen had suggested in early March that if jobs and inflation data held up — which they did — then a hike would be appropriate, Kleinschmidt said.
According to Kiplinger’s latest forecast on interest rates, the Fed will likely pull back to only one more hike this year if there is any hint that the economy is reacting badly to the March increase.
“But if the economy keeps growing as expected, then the FOMC expects three quarter-point increases in 2018 and three more in 2019, bringing the federal funds rate to 3 percent, the Fed’s preferred level,” Kiplinger reports.
Yellen and her colleagues will also be on the lookout next year for any inflationary effects of President Donald Trump’s proposed tax cuts and spending on the military and infrastructure, if those measures get through Congress, according to Kiplinger.
The Federal Open Market Committee within the Fed is charged under United States law with overseeing the nation's open market operations, such as buying and selling of United States Treasury securities.
Rates are now around 4.2 percent and even with slow increases expected to stay below 5, Farley added.
In terms of demographics, Farley said Millennials are “slightly more complex” than in past years when looked at as a force in the market.
“Right after the downturn in the economy, they were saddled with student loan debt and moving back into mom and dad’s basement,” she said. “Now, as rates start to creep up, they are realizing that long-term ownership of a home is the primary generator of wealth in most people’s lives.”
However, most recent employment data shows that Millennials are employed at the highest rate since 1999.
Recent Census data shows that their income jumped 7 percent and they are beginning to be much more optimistic in their investments, Farley said.
“It is further complicated by the fact that now Millennials — who have some improved purchase power — are also running into inventories that are very low,” she said.
“Add to that the fact that when a good home does come on the market, they are scooped up quickly by buyers with cash or larger down payments,” she said. “Overall though, Millennial surveys still indicate that they are desirable of home ownership. In our area, that is made even more likely by the rising cost of renting.”
According to the NAR, a healthy inventory should have a depth of about six months’ inventory. Many parts of the country only have about three months.
The months’ supply of homes in Oswego County stood at 5.2 in February, compared to a much higher figure of 8.9 in February of 2016, a drop of nearly 42 percent. Months of supply is the measure of how many months it would take for the current number of homes on the market to sell.
In Oswego County, there were 93 new listings in February, a drop of nearly 14 percent compared to last year. Closed sales in February — 60 — were nearly exact to what transpired in February of 2016, according to the New York State Association of Realtors.
There were 497 homes for sale in Oswego County in February, a dramatic drop of nearly 31 percent when compared to the year-ago figure of 714.
Meanwhile, baby boomers are expected to make up nearly one-third of the entire market for 2017.
Boomers are the most stable and have the most discretionary income, Farley said.
“Many retired with decent health care and some kind of a small pension, which is harder to find in newly hired positions,” she said. “Most boomers went from their starter home, to their expanded family home and are now looking to downsize and simplify by living on one level or owning a small condo unit where someone else takes care of the lawn, snow removal and maintenance.”
Farley said this allows them to travel south for a few months in the winter or perhaps buy a small, simple vacation home.
Baby boomers, the oldest of whom are entering their late 60s, are looking to move as they reach their retirement years, Kleinschmidt said. “They look to downsize, often into one level living. They are looking for smaller, easy manageable yards and often desire to be close to village amenities,” she said.
Many boomers are opting not to move to traditional retirement hot spots like Arizona or Florida, instead choosing to move closer to their families, she added.
“Since single females live longer, they are even looking at cooperative living arrangements to share expenses,” Farley said.
Farley said whenever there is a new administration in Washington, there is some caution.
“This year, that level of apprehension is even more pronounced. There seems to be a split between those business investors who expect more deregulation and fewer governmental restrictions — recent executive order on Dodd-Frank and the Volker Rule — and the average consumer who may want the protections of portions of the Environmental Protection Agency, or the assistance of an Federal Housing Authority, Veterans Administration or Housing and Urban Development-backed mortgage, in the style of U.S. Senator Elizabeth Warren (D-Mass.), she added.
Farley said the city of Oswego is in the midst of “some very strong optimism in the real estate market due to recently received grants, grassroots neighborhood investments and improving employment numbers.”
She added the county will also be helped with dollars being put into the Oswego County Land Bank to try and get abandoned or foreclosed properties back on the tax rolls.
- John Cerniglia
- Stacy Varre
- Christopher Mitchell
- Deborah Tuttle
Main concern is about matching physician with hospital, community
No. 1 priority is offering a high level of customer service
Recruiting the right physicians can take months, sometimes years, hundreds of communications and many meetings
Unlike other hospitals in the area, SUNY Upstate relies on each department to recruit its own physicians
- Elvis is in the House
- What Will People Purchase in America Over Next Decade?
- Home Flipping
- Faye Beckwith: Serial Entrepreneur
- Internet Dramatically Changes the Way We Buy, Sell Real Estate
- Weather Forecasting
- Health Care Providers in Short Supply
- Sleep Medicine is Big Business in CNY
- The Strategist at Oswego Health
- New Age of Medicine Has Arrived
- Welcome to Telemedicine
- The Case to Support Breast Feeding Moms in the Workplace
- Ridding the City of ‘Rogues’
- Beyond SEO
On The Job
Douglas Outdoors LLC
Bad Reviews on Social Media? Businesses Are Taking Action
Programs Help Business Development and Growth